ftek20220331

ftek20220331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

March 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to______.

Commission file number: 001-33059

FUEL TECH, INC.

(Exact name of registrant as specified in its charter)

Delaware

20-5657551

(State or other jurisdiction of

incorporation of organization)

(I.R.S. Employer

Identification Number)

Fuel Tech, Inc.

27601 Bella Vista Parkway

Warrenville, IL 60555-1617

630-845-4500

www.ftek.com

(Address and telephone number of principal executive offices)

________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	FTEK	NASDAQ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On April 29, 2022 there were outstanding 30,296,297 shares of Common Stock, par value $0.01 per share, of the registrant.

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2022 and 2021	3
	Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20
Item 4.	Controls and Procedures	20
PART II.	OTHER INFORMATION	21
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 6.	Exhibits	22
SIGNATURES		23

	March 31,			December 31,
	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	34,174		$	35,893
Restricted cash		1,066			891
Accounts receivable, net		4,795			3,259
Inventories, net		361			348
Prepaid expenses and other current assets		1,060			1,074
Total current assets		41,456			41,465
Property and equipment, net of accumulated depreciation of $18,325 and $18,243, respectively		4,554			4,609
Goodwill		2,116			2,116
Other intangible assets, net of accumulated amortization of $355 and $341, respectively		448			448
Restricted cash		—			270
Right-of-use operating lease assets		210			242
Other assets		837			824
Total assets	$	49,621		$	49,974
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,240		$	1,561
Accrued liabilities:
Operating lease liabilities - current		106			113
Employee compensation		637			688
Other accrued liabilities		999			861
Total current liabilities		3,982			3,223
Operating lease liabilities - non-current		98			122
Deferred income taxes, net		139			139
Other liabilities		269			290
Total liabilities		4,488			3,774
Stockholders’ equity:
Common stock, $.01 par value, 40,000,000 shares authorized, 31,272,303 and 31,227,300 shares issued, and 30,296,297 and 30,263,791 shares outstanding, respectively		313			312
Additional paid-in capital		164,216			164,199
Accumulated deficit		(115,547	)		(114,549	)
Accumulated other comprehensive loss		(1,674	)		(1,604	)
Nil coupon perpetual loan notes		76			76
Treasury stock, at cost		(2,251	)		(2,234	)
Total stockholders’ equity		45,133			46,200
Total liabilities and stockholders’ equity	$	49,621		$	49,974

	Three Months Ended
	March 31,
	2022			2021
Revenues	$	5,535		$	5,033
Costs and expenses:
Cost of sales		3,245			2,675
Selling, general and administrative		3,054			3,100
Research and development		220			415
		6,519			6,190
Operating loss		(984	)		(1,157	)
Interest expense		(5	)		(4	)
Interest income		1			1
Other (expense) income, net		(10	)		1,558
(Loss) income before income taxes		(998	)		398
Income tax expense		—			—
Net (loss) income	$	(998	)	$	398
Net (loss) income per common share:
Basic net (loss) income per common share	$	(0.03	)	$	0.01
Diluted net (loss) income per common share	$	(0.03	)	$	0.01
Weighted-average number of common shares outstanding:
Basic		30,267,000			27,510,000
Diluted		30,267,000			27,737,000

											Accumulated			Nil
						Additional					Other			Coupon
	Common Stock					Paid-in		Accumulated			Comprehensive			Perpetual		Treasury
	Shares			Amount		Capital		Deficit			Loss			Loan Notes		Stock			Total
Balance at December 31, 2020		25,229		$	262	$	140,138	$	(114,603	)	$	(1,370	)	$	76	$	(2,182	)	$	22,321
Net income		—			—		—		398			—			—		—			398
Foreign currency translation adjustments		—			—		—		—			(193	)		—		—			(193	)
Stock compensation expense		—			—		20		—			—			—		—			20
Common stock issued in connection with private placement, net		5,000			50		23,979		—			—			—		—			24,029
Common shares issued upon vesting of restricted stock units		50			—		—		—			—			—		—			—
Taxes paid on behalf of equity award participants		(15	)		—		—		—			—			—		(52	)		(52	)
Balance at March 31, 2021		30,264		$	312	$	164,137	$	(114,205	)	$	(1,563	)	$	76	$	(2,234	)	$	46,523

	As of
	March 31, 2022			December 31, 2021
Trade receivables	$	2,681		$	2,122
Unbilled receivables		2,222			1,277
Other short-term receivables		90			83
Allowance for doubtful accounts		(198	)		(223	)
Total accounts receivable	$	4,795		$	3,259

					Weighted- Average
	Number		Weighted-		Remaining		Aggregate
	of		Average		Contractual		Intrinsic
	Options		Exercise Price		Term		Value
Outstanding on January 1, 2022		434,500	$	3.05
Granted		—		—
Exercised		—		—
Expired or forfeited		—		—
Outstanding on March 31, 2022		434,500	$	3.05		2.84	$	43
Exercisable on March 31, 2022		434,500	$	3.05		2.84	$	43

				Weighted Average
				Grant Date
	Shares			Fair Value
Unvested restricted stock units at January 1, 2022		45,003		$	1.51
Granted		—			—
Forfeited		—			—
Vested		(45,003	)		1.51
Unvested restricted stock units at March 31, 2022		—		$	—

Range of Exercise Price	Number Outstanding/Exercisable		Weighted Average Remaining Life in Years	Weighted Average Exercise Price
$5.10		2,500,000	4.37	$	5.10
$6.45		350,000	4.37	$	6.45
		2,850,000

	Air Pollution			FUEL CHEM
Three months ended March 31, 2022	Control Segment			Segment			Other			Total
Revenues from external customers	$	2,204		$	3,331		$	—		$	5,535
Cost of sales		(1,429	)		(1,816	)		—			(3,245	)
Gross margin		775			1,515			—			2,290
Selling, general and administrative		—			—			(3,054	)		(3,054	)
Research and development		—			—			(220	)		(220	)
Operating income (loss) from operations	$	775		$	1,515		$	(3,274	)	$	(984	)

	Air Pollution			FUEL CHEM
Three months ended March 31, 2021	Control Segment			Segment			Other			Total
Revenues from external customers	$	907		$	4,126		$	—		$	5,033
Cost of sales		(531	)		(2,144	)		—			(2,675	)
Gross margin		376			1,982			—			2,358
Selling, general and administrative		—			—			(3,100	)		(3,100	)
Research and development		—			—			(415	)		(415	)
Operating income (loss) from operations	$	376		$	1,982		$	(3,515	)	$	(1,157	)

	Three Months Ended
	March 31,
	2022		2021
Air Pollution Control
Technology solutions	$	1,841	$	373
Spare parts		96		180
Ancillary revenue		267		354
Total Air Pollution Control technology revenues		2,204		907
FUEL CHEM
FUEL CHEM technology solutions		3,331		4,126
Total Revenues	$	5,535	$	5,033

	Three Months Ended
	March 31,
	2022		2021
United States	$	3,688	$	4,463
Foreign Revenues
Latin America		69		75
Europe		404		375
Asia		1,374		120
Total Foreign Revenues		1,847		570
Total Revenues	$	5,535	$	5,033

	Three Months Ended
	March 31,
	2022		2021
Products transferred at a point in time	$	3,694	$	4,660
Products and services transferred over time		1,841		373
Total Revenues	$	5,535	$	5,033

a.	Exhibits (all filed herewith)
	31.1	Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002
	31.2	Certification of principal financial officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
	32	Certification of CEO and principal financial officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002
	101.1	Inline INSXBRL Instance Document - The Instance Document does not appear in the Interactive Data File because its Inline XBRL tags are embedded within the Inline XBRL document.
	101.2	Inline SCHXBRL Taxonomy Extension Schema Document
	101.3	Inline CALXBRL Taxonomy Extension Calculation Linkbase Document
	101.4	Inline DEFXBRL Taxonomy Extension Definition Linkbase Document
	101.5	Inline LABXBRL Taxonomy Extension Label Linkbase Document
	101.6	Inline PREXBRL Taxonomy Extension Prevention Linkbase Document
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Date: May 10, 2022	By:	/s/ Vincent J. Arnone
		Vincent J. Arnone
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: May 10, 2022	By:	/s/ Ellen T. Albrecht
		Ellen T. Albrecht
		Acting Treasurer and Controller
		(Principal Financial Officer)

SEC Form 10-Q filed by Fuel Tech Inc.